‘The Firm’ not so firm: It’s breaking up

Several sources from legal, business and political circles have claimed that the Villaraza Cruz Marcelo & Angangco, or CVC Law office, easily the country’s richest and most powerful law firm, is in turmoil and on the verge of breaking up, with senior partners Avelino “Nonong” Cruz and Simeon Marcelo threatening to leave the 33-year-old law partnership over management and financial differences.

A top government official close to the partners said that 15 partners belonging to the so-called “government bloc” of Cruz and Marcelo were planning to leave CVC Law. This would leave the rival faction led by chair and CEO F. Arthur “Pancho” Villaraza with only eight partners.

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“CVC Law or The Firm has parted ways,” declared the government source, who requested anonymity because he was not authorized to speak in behalf of the law firm.

No comment

Asked for his reactions on the dispute, CVC Law managing partner Bienvenido I. Somera Jr. replied in a text message that he “can’t comment at the moment.” Several attempts to reach Villaraza through an intermediary also yielded the same result. Marcelo did not return the Inquirer’s calls.

Cruz served as presidential legal counsel and defense secretary during the term of former President Gloria Macapagal-Arroyo, who used to be The Firm’s most powerful client, while Marcelo served as solicitor general and ombudsman during the same administration.

A lawyer and fraternity brother of Villaraza at the University of the Philippines law school’s Sigma Rho fraternity said the partners were bickering on how to divide the profits of the company.

Bigger slice of profits

The lawyer, who requested anonymity, said the group of Cruz and Marcelo had claimed that they had brought in more government clients to the company and therefore deserved a bigger slice of the profits.

The lawyer said The Firm’s top brass held several “ill-tempered” meetings over the past few days, and that their separation was just a formality. Cruz, he said, had even pushed for the immediate sale of the law firm’s multibillion peso headquarters, the 12-story CVC Law Center at the Fort Bonifacio Global City which was completed three years ago.

An insider from The Firm confirmed that the partners held a “tempestuous” meeting last Wednesday where the seniors partners were supposed to start the separation proceedings.

Purely business vs advocacy

Some partners, however, decided to take a few more days to rethink their stand in the hopes that the two sides would soften their stance and agree to a compromise.

But the insider said that the partners were not squabbling over money because the division of properties would only matter after the partnership had been dissolved. For the past two years, the insider added, the government bloc had been at odds with the Villaraza group’s policy of treating the partnership as a purely business enterprise.

The government bloc had maintained that The Firm could “still do well and do good” by taking on cases primarily for advocacy rather than just for profit, the inside source said.

Another source however said that The Firm is divided into one faction led by Villaraza and Raoul Angangco, with eight partners on its side, including Somera, who acted as The Firm’s chief operating officer, and often served as a bridge to the rival faction led by Cruz and Marcelo.

‘Discontent over treatment’

“Most of the law firm’s partners who had served in government are on [the Cruz-Marcelo] side,” the source said, adding that 15 partners are in this faction.

The source said that the looming dissolution of CVC Law was caused by “discontent” in the Cruz-Marcelo camp over what some partners have described as Villaraza’s “style of treating his other partners.”

Said the source: “The split was caused by fundamental differences in the direction of The Firm and [its] manner of practicing law. The rift has little to do with money matters.”

The source said that the troubles at The Firm and its 23 partners had been brewing for the last few weeks, and that attempts were made to resolve the impasse. So far, such efforts have failed, the source added.

PR fallout

More recently, both sides have been trying to come to an agreement on how to divide the company, including how to dispose of its headquarters at Bonifacio Global City in Taguig City, while limiting the public relations fallout of the dissolution. But such talks had also failed to break the deadlock.

“It now looks like the breakup would happen soon,” the source said. “This could be fast.”

Rumors of the breakup were fanned by the glaring absence of Cruz, Marcelo and other partners from the “Casa Artusi” series of dinners hosted by The Firm for its blue-chip clients at its ultra-exclusive Rainmakers Lounge at the CVC Law Center’s penthouse.

Guests who asked why only Villaraza and allied partners Augusto A. San Pedro Jr. and Franchette Acosta were around at the event were told that Cruz and Marcelo would be holding separate dinners for their clients.

The Firm was formed in 1980 by Villaraza, Cruz, Tommy Rossel, Romy Barza and current Supreme Court Associate Justice Antonio Carpio.

Falling out with Gloria Arroyo

After its office burned down in 1982, The Firm moved to the LTA Building in Makati owned by the family of former First Gentleman Jose Miguel Arroyo, and stayed there until 2010 even after a falling out with former President Macapagal-Arroyo in 2005 that forced Cruz and Marcelo to quit her administration.

Villaraza and Carpio served as legal counsel for several allies of then President Ferdinand Marcos in the 1980s, but was relatively low-key during the terms of Presidents Corazon Aquino (1986 and 1992) and Joseph Estrada (1998 to 2001).

It was during the term of President Fidel V. Ramos that CVC Law again rose to prominence when Carpio was appointed presidential legal counsel. The Firm was largely credited with breaking up the decades-old monopoly of Philippine Long Distance Telephone Co. during this period. It was also during this time when CVC Law earned the monicker, The Firm, after a bestseller written by American author John Grisham.

Estrada impeachment

The Firm also took part in the impeachment trial of Estrada when Marcelo served as one of the prosecutors.

The law firm’s roster of big-ticket corporate clients include Pilipinas Shell Petroleum Corp., the Rizal Commercial Banking Corp., several companies under the Lopez group, among them ABS-CBN Broadcasting Corp., Sagittarius Mines Inc. and several high-profile individuals.

CVC Law served as the external counsel of the Bangko Sentral ng Pilipinas in its latest round of legal battles with the shuttered Banco Filipino Savings and Mortgage Bank. It was also part of the successful operation to shut down the P14-billion Legacy scam in 2009.

Last year, The Firm served as advisers during the impeachment trial of former Chief Justice Renato Corona. With a report from Daxim L. Lucas